Editor’s note: This commentary is by Tom Pelham, who is a member of the Green Mountain Care Board. He was formerly finance commissioner in the Dean administration, tax commissioner in the Douglas administration, a state representative elected as an independent and who served on the Appropriations Committee.
Health care reform has been an emergent journey for Vermonters for years. In the early 1990s, Vermont enacted “community rating” requirements to inhibit insurance companies from employing plans benefiting the healthy at the expense of the sick, that cherry-pick among demographic populations and that deny insurance to those with preexisting conditions. And in subsequent years Govs. Madeleine Kunin, Howard Dean and Jim Douglas and their respective legislatures established programs like Dr. Dynasaur, VHAP and Catamount to extend affordable health care to more Vermonters, especially children.
Then, in 2010, the Affordable Care Act (ACA) passed and subsequently Gov. Peter Shumlin and the Legislature enacted Act 48. It was then noted that “health care costs … (were) growing between 6.5 and 8.5 percent per year,” that Vermonters were “paying more and more for less and less coverage, and almost 200,000 Vermonters are either uninsured or underinsured.” Vermonters were advised that “Act 48 puts Vermont on a path to a single payer system.”
However, the roll-out of Act 48 was a disaster. The cost of developing Vermont Health Connect, the technological platform for purchasing ACA-sponsored insurance plans, ballooned to $198.7 million with annual operating costs mushrooming to $51.8 million, delivering a crushing blow to single payer aspirations.
In October 2016, Vermont entered into an agreement with the federal Center for Medicare and Medicaid Innovation (CMS) to pursue more modest reforms based on the establishment of an all-payer ACO model. This agreement allows five years, from 2018 to 2022, for the model to achieve results. Straight from the agreement, here’s what the state and federal government have agreed.
“Through the Vermont All-Payer ACO Model, CMS’s purpose is to test whether the health of, and care delivery for, Vermont residents improve and healthcare expenditures for beneficiaries across payers (including Medicare FFS, Vermont Medicaid, Vermont Commercial Plans, and Vermont Self-insured Plans) decrease if: a) these payers offer Vermont ACOs (ACOs operating primarily in Vermont, as defined below) aligned risk-based arrangements tied to health outcomes and healthcare expenditures; b) the majority of Vermont providers and suppliers participate under such risk-based arrangements; and c) the majority of Vermont residents across payers are aligned to an ACO bound by such arrangements.”
As clearly stated in the agreement, there are no expectations that the ACO’s approach to health care reform will prove successful after just two years. In fact, because of the time necessary to process and analyze claims data, an analytical window into the ACO exists for only 2018.
Yet, irrespective of the above history, now comes a VTDigger story about the ACO. While its hyperbolic approach has unleashed the animal spirits of many readers, from progressive to libertarian, it poorly informs and does little to serve the thousands of Vermonters who stand to gain from the health care reforms the ACO was established to deliver.
Other considerations include the following:
— The VTDigger article notes that the ACO’s requested 2020 operating budget is $19.3 million and that Vermont’s health care spending, the target of ACO’s reforms, was $6 billion in 2017. Yet VTDigger fails to do the math. In relation to 2017, $19.3 million equals just 3/10ths of 1% of total health care spending. Certainly, in relationship to 2020 health care spending, $19.3 million would be even a smaller percentage. Further, the ACO’s operating costs pale in comparison to the development and operating costs of near $250 million noted above for Vermont Health Connect.
I accept that in 2022 we might find that the ACO is a failure and would agree that sunsets on the ACO budget may be necessary to ensure spending does not continue in the face of failed results. But, as a premium and tax-paying Vermonter, spending 3/10ths of 1% to chart a course away from “fee-for-service” and toward population health investments is not an outrage; in fact, it is exceedingly modest relative to past attempts.
— Though the ACO of necessity is a private entity, the Green Mountain Care Board has legal oversight over the ACO’s budget; an area where the board has a proven track record. In the eight years (2003-2011) before the Green Mountain Care Board was created, hospital spending grew at the annual rate of 7.47%. In the eight years (2012-2019) since the board’s creation, hospital budgets grew at the annual rate of 4.12%. If hospital budgets had continued to grow annually at 7.47%, hospital spending today would be $752.8 million higher. Yes, there are still some dog whistle fiscal issues outside the control of the GMCB, excessive hospital salaries included, but overall the GMCB has saved Vermonters a lot of money.
Certainly, VTDigger should keep a critical eye on the ACO. But hacking away at the ACO in its infancy is not insightful nor thoughtful journalism, though it ironically plays well into the hands of both hardcore single payer and anti-government devotees. VTDigger has the leverage to browbeat the nascent ACO out of existence, but then must own the demise of the fiscal and population health reforms the ACO was tasked to achieve. While it is still way too early to determine the ACO’s success or failure, if failure is the ultimate result, then safeguards like funding sunsets can be established. And finally, there are issues VTDigger might engage of more immediate importance. Three come readily to mind: the cost shift and payer mix profiles which reward some hospitals at the expense of others; the benefit profiles of insurance policies that reward illness over prevention; and the steep premium cliff above 400% of the federal poverty level which puts insurance out of reach for thousands of Vermonters.
